The Question Michael Dell Refuses To Answer...

Michael Dell is strolling around the conference center in Davos
today--looking quite sharp, as usual.

So are Steve Schwarzman and a number of other
private-equity moguls, including some who may or may not be
involved in the hot-and-heavy talks to take Dell private.

Michael Dell and the private-equity moguls, of course, won't
discuss the ongoing talks, even in the corridors at Davos.

But here are some questions that Michael Dell, especially, should
be encouraged to answer:

What are you going to do when you take Dell private
that you aren't doing now?

Why don't you just do that now--for your public
shareholders?

We can, of course, speculate about what Michael Dell and his
private-equity partners will do when they take Dell private:

Borrow a huge amount of money (lever the
company up)

Use that money and the cash on hand to pay themselves a
huge one-time dividend (probably recouping their
entire purchase price and then some in the process)

Fire thousands of employees and drastically cut
costs

Sell off some crappy or un-strategic
businesses

Sell the company back to the public-market shareholders
at a much higher price than they are about to buy it from them
for

Smile all the way to the bank

That's standard private-equity operating procedure.

Sometimes, if it's done well, it actually improves companies, in
addition to making the private-equity moguls rich.

Sometimes, if it's done badly, it guts companies and overloads
them with debt, so that they collapse within a year or two of
being sold back to the public markets.

There's nothing wrong with the good part of that.

But if that's what Michael Dell and his private-equity backers
plan to do with Dell when they buy it--if that's the way to
generate an awesome return for shareholders--why doesn't CEO
Michael Dell just do that now? What's stopping him?